March Jobs Report Disappoints

The number of jobs created was the lowest amount since December 2013.

By Timothy Noah

POLITICO: The economy added 126,000 jobs in March, the Labor Department reported Friday, down substantially from February’s increase of 295,000 jobs. Unemployment was 5.5 percent, unchanged from February, and average hourly private-sector earnings were up 7 cents, up from February’s 3-cent increase.

Analysts had predicted the creation of about 247,000 jobs, an unemployment rate of 5.5 percent and an increase in hourly earnings of 0.2 percent, according to a Bloomberg survey of economists.

The jobs report provides further evidence that economic growth has slowed since the end of 2014. March’s deceleration in job growth followed a slowdown in GDP growth during 2014’s fourth quarter to 2.2 percent, compared to an impressive 5 percent in the third quarter. The Atlanta Fed’s GDP Now forecast for GDP growth in the first quarter of 2015 is currently a weak 0.1 percent.The number of jobs added in March is lowest since December 2013, when 109,000 jobs were created, and the Labor Department revised down the amount of jobs added in January and February by a combined 69,000.

Paradoxically, though, wage growth increased. The 7-cent boost in hourly wages may indicate that recent decisions by McDonald’s, Wal-Mart, Target and TJ Maxx to boost hourly minimums reflected a tightening labor market, though probably confined mostly to low-income workers. In 2014 more than a dozen states raised their minimums.

“Payrolls are always volatile even at the best of times, and we are coming off a run of almost unbelievably strong employment growth stretching back to last summer,” Paul Ashworth, chief economist at the research firm Capital Economics, said in a statement. “All the other labor market indicators that we track point suggest that labor market conditions are still very strong: initial jobless claims are unusually low, the job openings rate is near a record high, and the employment indices in the various activity surveys are at robust levels. Accordingly, we very much doubt this is the start of a new slump.”

But Elise Gould, a senior economist at the liberal Economic Policy Institute, said in a statement that the new report “should give us pause. … While it’s important not to put too much stock in a couple months of data — especially given the unusual amount of snow that blanketed the country in the past two months — policymakers should be wary of any signs of any slowdown from the solid job growth over the previous year.”

“There is still ample slack in the labor market,” Gould wrote. “Private sector hourly wages are up only 2.1 percent over the year. Wages need to grow faster, and for a longer time, before we can say the economy is truly working for working people.”

The low jobs numbers will play into the debate over when the Federal Reserve should begin raising short-term interest rates as it looks to scale back its economic stimulus efforts. Many analysts expect the central bank to begin increasing rates later this year, possibly as early as June. While the monthly jobs report is just one data point used by the Fed to measure the strength of the economy, if subsequent monthly jobs reports are also disappointing there will be pressure on the central bank to hold off on raising rates. 

Timothy Noah is the Labor and Employment editor with Politico where this story originally published and is reprinted on Corridor News with permission.